Getting old is a sure thing. It is undeniable that every human being will enter the phase of becoming an adult to old age. Therefore, having a retirement fund in old age is something that must be prepared from now on. The following is information about pension funds, pension benefits, and how to get and manage pension funds wisely in the style of BFI Finance.
Definition of Pension Fund
Pension funds are money or facilities owned by a person to fulfill life in old age or when he is no longer actively working due to working age, accidents, and experiencing disability. There are several types of pension fund institutions such as the following.
1. Employer Pension Fund (DPPK)
DPPK is an agency or business entity established by a person or group that employs other people as its employees. The founder of the company or the employer is obliged to provide pension benefits for their employees with a contribution system that can be disbursed or withdrawn when the employee decides to retire. This is stated in Pasal 1 Ayat 2 UU No.11 Tahun 1992..
2. Financial Institution Pension Fund (DPLK)
A financial institution pension fund is a pension benefit program that is defined as a defined contribution for employees, whether in a company or self-employed. This pension fund is established by a banking institution or insurance company and is separate from the employer's pension fund or DPPK.
3. Pension Guarantee Program from BPJSTK
Next is the pension insurance program from BPJS Ketenagakerjaan. This program must be followed by companies that have officially become taxpayers. Every month, the company is required to pay a contribution of 5.7% which is its responsibility, deducted by a deduction of employee contributions of 2% of the value of wages or salaries.
However, not all workers get these benefits. For freelancers or not working in a company registered as a taxpayer, the worker can register himself for the BPJS Employment program and pay contributions independently.
4. Insurance Institution Pension Fund
The last is pension insurance. This pension fund insurance is intended to provide protection and benefits for participants in old age. To get the benefits, you are required to pay a premium (an amount that must be paid by the insured customer to the insurance company according to the agreement to get the desired insurance benefit) every month until the agreed period.
Pension Fund Benefits
According to OJK, there are 2 benefits of pension funds that are useful in the future. The first is as life support or retirement provision and the next is as business capital in retirement. In addition, there are several other pension fund benefits that you need to know about.
First, as a weighted expense in old age. It is inevitable that the older the age, the more vulnerable the body's health is due to weakened immunity and accumulation or the result of a lifestyle in youth. In old age there are several diseases that are prone to suffer such as balance disorders, movement coordination, and decreased body sense function.
The second benefit of pension funds is to prevent the elderly from becoming neglected people. Neglect in this case means economic, social, and psychological difficulties. In addition, pension funds also function to support the needs of family life. The assumption is that when you get older, there is a potential for death or death. If before entering old age, someone has died, it will have an impact on the family he left behind. So, retirement funds are very important and need to be prepared from now on.
Pension Fund Simulation
Talking about pension funds, what is the right nominal for a pension fund in the future? The following is a simulation of the number of pension funds that can be used as a reference.
- Current Age: 40 Years
- Retirement age: 50 years
- Life prediction: 70 years
If you want to retire at the age of 50 and predict that you will live to be 70, the range for your pension is the cost of living per month multiplied by 20 years or 240 months. If the cost of living is around 5 million, then Rp 5 million x 240 months = Rp 1.2 billion. This figure does not include the value of money in the future or its future value.
For the future value, the following is the calculation of the number of pension funds that need to be prepared.
Total annual expenditure X (1+percentage inflation)^n
*n is the difference between your current age and your target retirement age.
Inflation percentage ranges from 1-3% (in the example case using 1% inflation)
=(5,000,000 X 12) X (1,01)^10
=60,000,000 x (1.01)^10
= IDR 66 million / year.
If it is calculated along with inflation, then the number of pension funds from 1.2 billion to 1.3 billion or an increase of around Rp 100 million for 20 years.
This figure is a simulation that can be adjusted according to each person's income and expenses. The larger the pension fund, the more prosperous your future economic condition will be and avoid being neglected or burdened.
How to Prepare for Retirement Fund
Before it's too late or regrets it later, let's together prepare a retirement fund by doing the following things.
1. Controlling Expenditure
The first way to prepare a retirement fund is to control expenses. In this era, many people have a lifestyle that is not in accordance with their abilities. As a result, most of their income is spent on buying things that are not important/consumptive life, low awareness of saving and investing, and not guaranteed old age.
From now on you can be wiser in spending money to avoid spending outside of the calculations or plans that have been made. Be sure to create an old-age savings post so that you are trained and enthusiastic about setting aside retirement funds.
2. Focus on the Future
Life will always move forward, so always focus and prioritize the future and try to put aside things that are less important or can even waste time and money in vain. You can start investing long-term to achieve financial independence in the future. There are several investment instruments that you can try starting from investing in gold, property, stocks or mutual funds as short and medium-term investments.
3. Looking for Additional Income
You are also advised not to close yourself to the opportunities that exist and be able to take advantage of your potential to get income coffers outside of your main job. There are many choices that you can do, starting from being a freelancer, selling online, and opening certain services according to your skills and abilities. After getting additional income, it would be better if the additional money was allocated to a pension fund post and not used for mere desires.
For those of you who need additional side business capital, you can entrust BFI Finance as the solution. You can apply for a business capital loan with a vehicle BPKB guarantee or your home certificate. For further information and explanation regarding the product, click the following link.
4. Not Relying on Office Pension Funds
For some people, they do get pension benefits provided by the office if the employee enters retirement, has an accelerated retirement or reduction in the company, if the employee has an accident that causes disability and is unable to work as usual, or when the employee submits his resignation before retirement.
However, you can't depend on a pension fund from the office because at any time there can be risks such as a company going bankrupt or other things. That's some information about the types of pension funds, the benefits of pension funds, and how to prepare them. Hope this article was useful!
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